20 Adams Street | Suite 200 | Boston, MA 02129

Asset Allocation Insights – Commodities Roar Back

Commodities Roar Back

  • Risky assets suffered large losses last week with EM stocks taking the biggest beating
  • Fixed income also experienced losses as interest rates globally spiked up
  • Only Commodities as an asset class experienced positive returns
  • Within equities, US large cap lost the least as Value strategies actually showed slight gains
  • A 60/40 mix of purely US assets out-performed a global version and remains vastly ahead YTD
  • In general, higher risk multi-asset strategies under-performed last week but remain ahead YTD


  • The USD regained lost strength last week
  • The Brazilian Real spiked up as pro-business President is expected to be elected
  • EM currencies continue getting pounded with the Rand taking the biggest beating as SA enters a recession
  • As central banks normalize their policies expect enhanced volatility as market participants balance interest rate differentials with economic growth dynamics
  • The Yuan has stabilized after a period of depreciation – authorities have refrained so far from using a weaker currency to fight tariffs


  • Best week this year for commodity prices – potentially a wakeup call as investor update their inflationary expectations
  • Sugar and coffee prices were up the most boosted by the appreciation of the Brazilian Real
  • Grain prices recovered from previous week lows but until tariffs with China are not agreed to we should expect to see huge volatility
  • Oil keeps marching higher as economic growth remains robust and sanctions against Iran take a bite out of supplies
  • Gold and Silver were stable last week for a change but barring a real crisis continue on a downtrend especially in light of higher short-term interest rates

This Coming Week:

  • Risky assets keep outperforming YTD but last week was a down week across the board except for commodities
  • The critical variable to watch for this week is the US 10 Year Note – another spike up and risky assets will be under great stress
  • Our view is that markets will calm down and that risky assets will recover this week
  • We are also watching out for any strong jump in inflationary expectations
    • An important economic number to watch this week is US CPI on Thursday
  • EM equities, in particular, are taking a huge hit both on the asset side as well as currency – this is turning out to be a lost year for EM investors
  • Value dramatically outperformed Growth last week and we are seeing faint signs of industry rotation toward value sectors
    • The Momentum trade while still ahead YTD is quickly losing strength
  • What will make investors price risk more in line with history?
    • A growth scare in the US, maybe? A real inflation scare?
  • The biggest issue for investors is lack of a reasonable hedge to equity risk

To read our full weekly report please click here

Eric J. Weigel

Global Focus Capital LLC



Weekly Asset Allocation Review – Free

Weekly Equity Themes Review – Free

The Equity Observer (Monthly) – Subscription Required

The Asset Allocation Advisor (Monthly) – Subscription Required


Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

HTML Snippets Powered By :